Your Stock Queries

INDOSOLAR

Q: I am holding 500 shares of Indosolar purchased at an average price of Rs 9 per share. Please advise as to what my next step should be.

- Vimal, Bhavnagar, Gujarat

A: Indosolar, BSE/NSE Code 533257/INDOSOLAR, with a face value of Rs 10, is currently trading at Rs 3.75. Its 52-week high/low stand at Rs 17/3.75, which is at a 58 per cent discount to your acquisition cost.

Indosolar is engaged in the manufacture and sale of poly-crystalline solar photo-voltaic (SPV) cells. The company manufactures SPV cells from silicon wafers by utilising crystalline silicon SPV cell technology that converts sunlight directly into electricity. It markets its products primarily to module manufacturers and system integrators worldwide.

On the financial front, the company’s results for 9MFY12 have not been very great. Its topline witnessed de-growth of 82 per cent on a YoY basis, and stood at Rs 85.15 crore as against Rs 498 crore in 9MFY11. It reported a loss of Rs 188 crore for 9MFY12 as against a loss of Rs 59.43 crore for 9MFY11. The topline has been declining consistently for the past four quarters. The reduction in its revenue from Rs 220 crore during Q3FY11 to Rs 8.77 crore in Q3FY12 is an alarming sign. On the valuations front, the stock trades at an EV/EBITDA of 9.83x and its debt-to-equity ratio stands at 1.27x.

We suggest that you exit the stock at present, even if you have to book losses.

BANK OF BARODA

Q: Should one look to buy the Bank of Baroda stock at its current market price?

- Swapan Ghosh, New Delhi

Bank of Baroda (BOB), BSE/NSE Code 532134/BANKBARODA, with a face value of Rs 10, is currently trading at Rs 656. Its 52-week high/low stand at Rs 948/615.

BoB is among the older public sector banking companies in India, which also offers various third-party products such as life insurance as well as non-life insurance products, including health insurance, mutual funds and equity trading. Currently, it operates through a network of 3404 branches and 1561 ATMs in India as well as through 85 branches/offices and 68 ATMs in 26 other countries. BoB is the second-largest public sector bank after SBI.[PAGE BREAK]

The bank’s total income for FY12 increased by 34 per cent to Rs 33096 crore, while the total expenditure increased by 38 per cent to Rs 24465 crore on a YoY basis. BOB continued its higher provisioning trend through the year, which saw its provisions increasing by 91 per cent to Rs 2554 crore. The net profit of the bank was up 18 per cent over last year, standing at Rs 5006 crore for FY12. Overall, there has been some pressure on its performance in the last quarter of FY12. As on March 31, 2012, the deposits of the bank increased by 26 per cent to Rs 384871 crore, while the advances increased by 25.7 per cent to Rs 287377 crore.

According to the management, its performance on the business front was way above the banking industry average in the past three years. The stock’s dividend yield stands at 2.34 per cent, and it is available at a price to book value of 1.07x. Hence, one can enter the scrip and invest in it for a longer term.

PREMIER

Q: I am holding shares of Premier, which were purchased at Rs 60 per share. Kindly advise me as to whether I should hold or sell these.

- Chirag G, Via Email

Premier, BSE/NSE Code 500540/PREMIER, with a face value of Rs 10, is currently trading at Rs 67.20. Its 52-week high/low stand at Rs 107 and Rs 59 respectively. The stock is currently trading at a 12 per cent premium to your acquisition cost.

Premier operates in the engineering, CNC machine design and development and automotive businesses in India. It offers specialised engineering solutions for various applications, as well as machining of precision components and sub- assemblies. It also engages in the assembly of vehicles from imported painted bodies. It offers various light and sports utility vehicles such as Premier RiO, a compact diesel SUV, and commercial vehicles including the Sigma, a compact multi-utility diesel van, and Roadstar, a pickup truck.[PAGE BREAK]

On the financial front, the company ended FY12 on a good note. The topline witnessed a growth of 16.99 per cent on a YoY basis, standing at Rs 268 crore as against Rs 229 crore for FY11. The bottomline witnessed a growth of 23.66 per cent YoY, and stood at Rs 22.84 crore as against Rs 18.47 crore for FY11. On the valuations front, the stock discounts its trailing 12-month earnings by 8.94x and the EV/EBITDA stands at 7.22x. The stock has a good dividend yield of 4.01 per cent, which is very encouraging. The debt-to-equity ratio stands at 0.43x.

At present, we suggest that you hold on to the stock from a longer term perspective to garner better returns.

MCNALLY BHARAT ENGINEERING COMPANY

Q: I have purchased 700 shares of McNally Bharat Engineering Company at Rs 105 per share. Please advise me as to what I should do with these.

- I Siva Kumar, Via Email

McNally Bharat Engineering Company (McNally), BSE/NSE Code 532629/MBECL, with a face value of Rs 10, is currently trading at Rs 88.80. Its 52-week high/low stand at Rs 183 and Rs 80 respectively, and the stock is trading at a 15 per cent discount to your acquisition cost.

McNally engages in turnkey projects in infrastructure and related manufacturing activities, primarily in India. The company offers its solutions in the areas of power, steel, aluminium and material handling, to name a few. It also manufactures scrubbers, coal washery equipment and critical fabricated equipment for the nuclear power industry.

On the financial front, its performance for FY12 has been quite good. The topline witnessed a growth of 18.25 per cent on a YoY basis, and stood at Rs 2079 crore as against Rs 1758 for FY11. The bottomline witnessed a growth of 7.70 per cent on a YoY basis, and stood at Rs 53.30 crore as against Rs 49.49 crore for FY11. The bottomline growth looks thinner, which is a result of the higher interest outgo. The interest cost increased by 78.16 per cent on a YoY basis, pushing the debt-to-equity ratio up to 1.87x. On the operating side though, the company’s performance is quite healthy. On the valuations front, the stock discounts its trailing 12-month earnings by 5.18x and the EV/RBITDA stands at 3.50x. The dividend yield stands at 2.21 per cent. At present, we suggest that you hold on to the counter for a couple of quarters more.